Shanghai Today
China's Economy Will Rebound in Second Half, Temasek Says - July 22, 2022
淡马锡公司预测中国经济会在2022年下半年恢复
Singapore's Temasek Holdings, a sovereign wealth fund that counts China as its second-largest investing destination, predicts the Chinese economy to recover in the second half.
"We are confident about the Chinese economy in the second half, and it is expected to grow from the first half," Wu Yibing, president of Temasek China, said in an interview with Yicai Global.
The first quarter was a perfect storm for Chinese assets due to the Covid-19 pandemic, as well as geopolitical and regulatory risks, Wu said.
The share of Chinese assets in Temasek's investment portfolio dropped by 5 percent in the fiscal year of 2022 from the previous year due to fluctuations in growth asset prices during an interest rate hike cycle, Wu said. Still, China made up 22 percent of its investments while Singapore's share was 27 percent.
"We have seen a lot of bullish factors for the Chinese economy in the second half, but there are still two major risks,” Wu said. First, exports may decline due to the risk of economic recession in Europe and the United States. Second, major global economies raise interest rates to tighten their monetary policies so risk asset prices are moving down. The global economy is exposed to a downtrend risk even though the China outlook is relatively better.
However, growth may be underpinned by receding domestic risks. China's economic policies have been clarified gradually. Macroeconomic policies have been shifted from managing risks to encouraging growth with clear encouragement to platform and digital economy, said Wu.
Moreover, epidemic prevention and control have become the new normal, and more precise measures have been adopted in response to new Covid-19 variants, the China chief added.
An important indicator of economic health is the macro leverage ratio. China’s ratio of debt to its gross domestic product has only climbed slightly even though the economy continues to be impacted by Covid-19 outbreaks, Wu said. In previous years, the ratio was lowered several times.
Temasek is a believer in technology. "China’s biggest dividend is still that of engineers," Wu said. "This will last for a long time." Temasek sees a big opportunity in the digital transformation of China’s industrial chain, he added.
One of the hot sectors of change is automobiles, Huang Zhejun, managing director of Temasek China, said to Yicai Global. Digital transformation is taking place in energy, manufacturing, driving, and marketing, Huang added.
Temasek is keeping its eyes on life sciences. There is relatively major room to substitute imports in the entire pharmaceutical industry, especially in the field of medical devices, said Shen Ye, another managing director of Temasek China. China needs to gradually improve the security of its supply chains. Temasek is paying attention to this and will invest in the sector, Shen added.
Source: Yicai
"We are confident about the Chinese economy in the second half, and it is expected to grow from the first half," Wu Yibing, president of Temasek China, said in an interview with Yicai Global.
The first quarter was a perfect storm for Chinese assets due to the Covid-19 pandemic, as well as geopolitical and regulatory risks, Wu said.
The share of Chinese assets in Temasek's investment portfolio dropped by 5 percent in the fiscal year of 2022 from the previous year due to fluctuations in growth asset prices during an interest rate hike cycle, Wu said. Still, China made up 22 percent of its investments while Singapore's share was 27 percent.
"We have seen a lot of bullish factors for the Chinese economy in the second half, but there are still two major risks,” Wu said. First, exports may decline due to the risk of economic recession in Europe and the United States. Second, major global economies raise interest rates to tighten their monetary policies so risk asset prices are moving down. The global economy is exposed to a downtrend risk even though the China outlook is relatively better.
However, growth may be underpinned by receding domestic risks. China's economic policies have been clarified gradually. Macroeconomic policies have been shifted from managing risks to encouraging growth with clear encouragement to platform and digital economy, said Wu.
Moreover, epidemic prevention and control have become the new normal, and more precise measures have been adopted in response to new Covid-19 variants, the China chief added.
An important indicator of economic health is the macro leverage ratio. China’s ratio of debt to its gross domestic product has only climbed slightly even though the economy continues to be impacted by Covid-19 outbreaks, Wu said. In previous years, the ratio was lowered several times.
Temasek is a believer in technology. "China’s biggest dividend is still that of engineers," Wu said. "This will last for a long time." Temasek sees a big opportunity in the digital transformation of China’s industrial chain, he added.
One of the hot sectors of change is automobiles, Huang Zhejun, managing director of Temasek China, said to Yicai Global. Digital transformation is taking place in energy, manufacturing, driving, and marketing, Huang added.
Temasek is keeping its eyes on life sciences. There is relatively major room to substitute imports in the entire pharmaceutical industry, especially in the field of medical devices, said Shen Ye, another managing director of Temasek China. China needs to gradually improve the security of its supply chains. Temasek is paying attention to this and will invest in the sector, Shen added.
Source: Yicai
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